There is a clear link between renewable energy growth and the cost of electricity: the cheaper the power produced from renewables, the lower the overall price for consumers. The International Energy Agency (IEA) quantified this dynamic, showing that in Spain, renewable energy installations are projected to deliver substantial savings between 2021 and 2023. Those savings stem from replacing more expensive fossil-fuel generation in the market, with the IEA estimating cumulative benefits reaching billions of euros. As more renewable facilities come online by the end of the period, total savings rise, with roughly a third of the anticipated value appearing in the first two years and the remainder accruing in the final year of the window. These findings are presented as a specific national example rather than a grand forecast for the entire EU or beyond, yet they illuminate the path for similar economies pursuing lower electricity costs through clean power. (IEA)
A broader EU-wide picture confirms the same trajectory. From 2021 through 2023, savings on the continent are forecast to total around 100 billion euros. The OECD-estimated pipeline for renewable capacity sits near 150 gigawatts (GW), with the majority of additions concentrated in wind and solar projects. By 2021 and 2022, almost 90 GW were installed, with roughly 60 GW expected to be completed in the current year. This accelerates the shift toward grid-connected wind and solar, helping to displace fossil generation such as gas and coal and contribute to lower wholesale electricity prices across the market. (OECD)
Without the surge in renewable capacity, wholesale electricity prices would likely rise by about 2 percent in 2021, 8 percent in 2022, and a further 15 percent in the current year. The IEA also notes that additional savings would have grown even more if wind and solar share had increased at a faster pace, underscoring the potential for faster gains when policy and market conditions align with renewable deployment. (IEA)
Momentum in the Energy Sector
The IEA emerged in response to the 1973 oil crisis to coordinate energy policies among member states. The current energy upheaval has intensified interest in solar and wind technologies as electricity prices respond to political and economic dynamics in Europe. This moment in history has accelerated growth expectations for Europe, with projections suggesting a notable expansion this year and into the next, compared with pre-crisis figures. Globally, the capacity for renewables has risen steeply, hitting new milestones even as the total installed capacity climbs toward multi-terawatt levels. A substantial portion of this growth is expected to come from China, which is anticipated to account for more than half of the new renewable capacity in the near term. By 2024, the global installed capacity is projected to approach several terawatts, with total world capacity surpassing 4,500 GW. (IEA)
The rapid expansion of solar and wind is reshaping the global energy economy. This year, many economies are preparing for record-setting gains in renewable capacity, with simultaneous emphasis on updating grids and policies to harness the full potential of sun and wind. The IEA notes that turning this potential into sustained growth will require policy alignment, investments in transmission networks, and a continued push toward integrated energy markets. In the words of Fatih Birol, the agency’s executive director, solar and wind are driving a quick and powerful shift, but realizing stronger growth depends on adapting policies to evolving market conditions and expanding electrical networks to unlock the full value of these clean resources. (IEA)